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Aberdeen Asset Management’s Chou Chong is finding attractive bargains among UK property securities.
Chong, who oversees all of Aberdeen's UK and European equity funds, said worries over yields and the financial health of tenants had hurt sentiment in property securities.
He said: ‘The property sector has been falling since the start of the year, on concerns about rising interest rates. Many property stocks, such as British Land (BLND) and Land Securities (LANB), are now trading at significant discounts to asset value and consequently we have been increasing our exposure to the sector.’
Chong remains optimistic in his outlook on UK equities in the wake of the credit crunch which has hit the market.
He believes the outlook is strong for the long-term and intends to use any more short-term weakness in markets to either add to existing holdings, or introduce stocks from Aberdeen’s watch-list.
He said: ‘All the recent market instability means that many companies are trading on attractive valuations and offering significant yields.
'We certainly believe that given these supportive valuations, generally healthy earnings growth and robust balance sheets, the outlook for UK equities is positive, particularly over the long-term.’
Chong has held on to his banking stocks, believing liquidity will soon return to the market.
He said: ‘Having visited all our key bank holdings over the last two months, their management is telling us that this is a temporary liquidity issue.’
However, he does admit the recent market turmoil is likely to cause a deterioration in earnings growth in the financial sector and more turbulence across the wider market over the short to medium-term.
Meanwhile, Chong’s bottom up investment approach is unearthing opportunities in the insurance sector, where he believes is benefiting from exposure to global economic growth.
Over the last three years Chong’s aggregated return on his UK Growth (Aberdeen UK Growth) , UK Opportunities (Aberdeen UK Opportunities A Inc) and UK Mid Cap (Aberdeen UK Mid Cap Inc) funds was 14.3% versus an average return of 12.2% from his UK All Companies peer group.